European stocks reverse early losses on Chinese trade comments; Micro Focus down 28%

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China’s Ministry of Commerce spokesman Gao Feng said on Thursday that Beijing was “willing to negotiate and collaborate,” adding that Chinese and U.S. trade delegations have maintained “effective” communication.
Meanwhile, soft inflation data reinforced expectations that the ECB (European Central Bank) will inject stimulus into the economy next month, providing an additional boost to stocks.

European markets reversed early losses on Thursday after the Chinese Ministry of Commerce said it firmly rejects an escalation of the trade war with the U.S., and vowed to resolve the dispute with a “calm attitude.”

The pan-European Stoxx 600 jumped 1% during afternoon trade, basic resources adding 2% as all sectors and major bourses traded comfortably in positive territory.

Tensions between the world’s two largest economies escalated last week with each country announcing increases to tariffs on one another’s goods, but China’s Ministry of Commerce spokesman Gao Feng said on Thursday that Beijing was “willing to negotiate and collaborate,” adding that Chinese and U.S. trade delegations have maintained “effective” communication.

Meanwhile, soft inflation data reinforced expectations that the ECB (European Central Bank) will inject stimulus into the economy next month, providing an additional boost to stocks.

Data from six German states indicated on Thursday that overall German inflation likely slowed in August from the prior month, sliding further below the ECB’s target. Spain’s August HCPI (harmonized consumer price index) came in at +0.4%, down from +0.6% on the year in July.

The ECB has indicated that stimulus could be forthcoming if inflation continues to languish well below its target of almost 2%, with markets expecting policy easing at the central bank’s meeting on September 12.

Euro zone August consumer inflation expectations came in at 20.7 vs 20.6 in July. Economic sentiment showed a slight improvement in August, according to the European Commission’s monthly sentiment data, boosted by optimism in the industry and retail sectors.

Investors are monitoring political developments after news Wednesday that U.K. Prime Minister Boris Johnson will suspend Britain’s parliament for more than a month before the country’s departure from the European Union. This would potentially scupper efforts from opposition parties to block a chaotic no-deal exit if Johnson is unable to secure a new deal with the bloc before October 31.

Italian politics is also in focus as President Sergio Mattarella on Thursday handed a fresh mandate to Prime Minister Giuseppe Conte to form a government, comprising a coalition between the Five Star Movement (M5S) and the opposition Democratic Party (PD). Conte had resigned following a decision by the Lega party to pull out of its previous coalition with M5S.
Stocks on the move

British software firm Micro Focus slightly pared early losses which saw shares hit their lowest level since April 2018 after the company cut its full-year guidance. The company’s stock was trading around 28% lower during the afternoon.

At the other end of the Stoxx 600, Luxembourg-based Eurofins Scientific jumped 6.7% after the biopharma testing firm reported better-than-expected first-half results and suffered only a mild loss from a recent cyberattack.

French industrial giant Bouygues gained 6.1% after reporting a jump in profits and better-than-expected first-half results.

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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